Management Theories And Philosophies

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Introduction to Management Theories And Philosophies

The concept of strategic aspects related to globalization has become prominent in the international business and management from past several years. Global strategy is getting more attention in the field of disciplines which emphasizes on business related studies; thus it is considered as an crossroad point ranging between the concept of strategic management and globalized business (Alvesson and Willmott, 2000). The development of global strategy field has gone through from relevant progress and also from number of bulge and turns. Firm that conduct business internationally considers all the formal and informal rules that govern the countries and that also manages global strategic aspects. There are four major dimensions covered under this aspect which are discussed in the below mentioned study. The researcher has critically analyzed all these four approaches to global strategy and along with the same, discussion has also been made regarding the impact of global strategy on complex business aspects.

The argument lies in the global strategic aspect related to cultural and institutional distance includes both the formalized and in formalized dimensions of the institutional environment and this is entirely concerned with the facets of institution based view. Further, the discussion between global and regional geographic diversification is related to political and cultural environment related debate (Glickman, Gordon and Ross-Gordon, 2001).  Moreover, the debate lies among convergence and divergence in corporate governance depicts wide range of ruling systems that can be placed globally. Hence, as a formal process legal legislation needs to be followed so that the process of globalization can be managed adequately. On the other hand, in order to connect the debate between domestic and overseas CSR, it can be said that there is an element that assists the firms to cope with environmental aspects. Business entities have been actively engaging themselves in CSR aspects due to increasing pressure from policies of multinational enterprises.

Four main debates in the field of global strategy

Cultural vs institutional distance:

Culture is considered as imperative part of international business management and it underpins the global strategy of any business because culture lies under micro aspects; however strategy is highly associated with macro forces. A new approach (institutional based view) of globalization strategy has come to existence has emerged and this argues that global strategy needs to be properly shaped by the conventional and in formalized institutions (McDermott, 2000). The dimension of this debate thus emphasizes on role of cultural aspects in an institution based view of global strategy. The approach of Hofstede can be considered here which is a classification of national culture and which also specifies the importance of cultural facets in global business environment. This also defines culture an aspect which is associated of social beliefs, communal values. All the transactions concerned with international business aspects includes interaction among varied societal values; thus this is the reason culture is considered as vital part for every business transaction (Miller, and Tsang, 2011). In such respect, Wilkinson addresses that both the cultural aspects prevailing in national and international level are used as dimensions that affect most of the business practices. This also includes resource concerned artifact, enterprise management and internationalization processes.

The debate also lay emphasis on culture distance vs institution distance which is another dimension for better measurement (Norton, 2005). Cultural distance engages the concept of primary divergence in both regional and international countries where in host and home countries follows different cultural values. Institution distance embraces social aspects and difference and along with this it also considers forces like regulatory difference, cognitive identification and normative pressure. Most of the influence arises from cultural values and this can be categorized on the basis of sociopolitical market forces. Studies of different authors examines the contribution of cultural distance which speculate that social values are different in national and international regions even if multinational enterprise is increasing. This also underlines the ability of multinational enterprises as how effectively they operate the entity in host market. When culture distance is high, multinational enterprise faces more difficulties in achieving efficacy in current operations. Therefore, cultural distance creates huge degree of complexity in work processes and it can also impact the managerial decision making process (Glickman, Gordon and Ross-Gordon, 2001).

Wide range of criticism and inconsistent findings related to cultural distance have been explored and MNE performance; however most of the studies showcases a negative relationship among both the facets. Cultural distance is significant initially; however its importance comes to decreasing stage when it is reviewed on the basis of institutional view approach (Donaldson and Dunfee, 1994).  The critics on this approach includes dimensions towards an institutional construct that can be construction on the basis of institutional distance. It entirely embraces cultural differences through incorporating all the legal regulations and prescriptive aspects of institutional situations. In order to ascertain the association of culture and institutions, it can be said that the are the crystallization and concerned with social norms which further also changes the ways of institutional approaches for cultural divergence. Hence, the authors also claims that causality is linked to institutions and cultures is useless until it is properly managed in the business entities. The real issue is that every aspect related to subsequent divergence is specific because it includes institutional and cultural explanation that also provides comprehensive aspects about firm's performance (Davis, Schoorman and Donaldson, 1997). 

Global vs regional geographic diversification

Firm that operates the business beyond the scope  needs to develop globalized strategy  because it determines all the global aspects of a firm which is yet difficult to ascertain. Thus, Perlmutter has confronted that being multinational can be seen as a prestigious aspect that enhances global power of the business (Ferraro, Pfeffer and Sutton, 2005). The author lay emphasis on three major aspects such as partisanship, polycentric and geocentric. It includes all the chief aspects of a firm which critically contributes to diversification of multinational dimensions in business operations. Having established regional multinational enterprise, it is required to have global experiments based on regionalization and that offers two chief facets. Initial one is about practices held on international level which ought to be operated at intra- regional level rather than inter-regional level (Goulding, 2002). Secondly, various multinational enterprise activities needs to be organized on regional level rather focusing on global level. The reason of observing more activities at inter regional and national level is due to inadequate concern towards foreign aspects in a specific region. Moreover, reason behind conducting the business on international level is that it develops difficulty in business practices and helps in developing more networks with different multinational organizations (Locke, 2001). In order to support this fact, several studies have been reviewed on regional divergence and firm's performance and this suggests that multinational enterprise needs to be regionally focused so that their performance level can be increased.

However, despite of these findings, some authors have argued that attention towards regional multinational enterprise activity is getting highly contemplative for nation's income and trade aspects. Hence, the main criticism can be seen towards measuring varied hierarchy aspects. Most of the multinational enterprises should be more correctly labeled as regional so that the value of relative measure can be found out. Most of alternatives can be adopted to specify region norms and several authors have defined cultural and institutional similarities (Partington, 2000).  In order to discuss the globalized economic aspects, several current researches suggests a trend towards different categories of interregionalism. The authors have also undertaken the approach towards bilateralism which can take place beyond the global boundaries. Focusing on the political aspects prevailing in the country, it is believable that multinational enterprises have to compete with different multiple regional entities where in most of them are not associated to each other. Another conflict is prevailing in the area of regional definition since that includes economical aspects. In such case, it can be articulated that multinational enterprise can acquire benefits from global political advantage that arises among home and host country (Williams, 2008). Instead of having large cultural and institutional distance, political resources can be utilized for these facets. Therefore, the regional divergence needs to specify political aspects and should also discuss its norms so as to comprehend the geographical patterns of variegation of multinational enterprise.

Convergence vs. divergence in corporate governance

Third Debate which discussed about corporate governance need to focus on the viewpoints of Mike W. Peng1 and Erin G. Pleggenkuhle-Miles, there are several people who have faith in economic philosophy generally encourages values and consider the concepts of convergence perspective. While on the other hand, there are various individuals in the society who are in the favour of the fact that culture of a nation initiates values are followers of divergence perspective (Willmott, 1992). However, this debate has been around for long time but still researchers and authors are unable to identify any answer. However, it always seems to be an increasing gap between thoughts and philosophies of two different schools.

In this regard, there is always a lively debate in corporate governance whether it is covering or diverging globally (Alvesson, and Willmott, 2000). However, in this context, people who follow convergence argue that globalisation is the process that unleashes the survival of fittest and finest corporate players. Constantly, companies are being forced to follow the practices which are suitable and reliable to sustain globally i.e. Anglo-American practices. There are mammoth governance codes that are enacted around the globe through the concept of Anglo-American practices. Furthermore, global investors these days are interested in paying premium to those companies only which are following the base of Anglo-American style of governance procedures (Davis, Schoorman and Donaldson, 1997). This trend is increasing rapidly which indeed affecting the course of companies who are not abiding with these concepts and due to which needs and wants of shareholders remain unheard in most of the part of corporate world which is constantly becoming more visible.

Apart from all, the biggest quarrel lashing in this aspect of the discussion consist of market forces which are enhancing their operations with cross national convergence to get established on the international standards (Donaldson and Dunfee, 1994). However, portrayal of varied set of compressions which consist of market, nation-state and foreign state has commanded the firms to increasingly adopt the international standards so as to enhance their business functioning and to sustain in the international market for a long period. But later, it was identified that, these set of pressures were not the major drivers but the risk of overseas marketplace termination to non-compliant multinationals was the major driver that was identified by the nation-state regularity authorities. Thus, it was identified that intended implementation of major global ethics were arrived from the characteristic menace of market agreement compressions.

Looking at the present condition in UK and US, companies operating in it are highly promoting the rigorous ownership and regulator which is often considered as the major solution to the conflicts of combat principle agent. In this regard, divergence followers determine the two major points of concern in case of cross listed firm i.e. as compared to companies of US; multinational firms have larger boards, integral directors and focuses on more concentrated ownership style (Easterby-Smith, Thorpe and Jackson, 2012). Thus, it is not necessary that cross listed firms operating in US abide by its governance before or after listing. Along with this, despite of several rules and regulations related to cross listed foreign firms in UK and US, these laws rarely affect the course of functioning of cross listed foreign firm.

While on the other hand, convergence followers determine that corporate governance rules and regulations are being applied around the globe (Erin. And, 2009). But contradicting to this, divergence clearly defines that it is feasible to export the formal US and UK style regulations around the globe but it is difficult to implant foreign rules and regulations within these countries because companies operating in it have larger boards, integral directors and focuses on more concentrated ownership style. Therefore, it can be said that considering the global economic perspective, following comprehensive divergence is perhaps the impractical approach. In particular, firms that operate at a large level and are always in quest of raising investment from international investors cannot undertake the concepts and standards of divergence in corporate governance (Ferraro, Pfeffer and Sutton, 2005).

Domestic vs. Overseas Corporate Social Responsibility

In general terms, corporate social responsibility is one of the major aspects of a business enterprise irrespective of operating in domestic or overseas marketplace (Glickman, Gordon and Ross-Gordon, 2001). However, it has been one of the biggest and continuous sources of debate among different scholars and policy makers. Considering from the global perspective, it is important for the organizations to uphold equilibrium among domestic and overseas CSR activities. Herein, practitioners always focus on the fact that in case if there are limited corporate resources than companies have to define their priorities either domestic market or international market. Along with this, according to the top level management of a firm whose interests are more important in terms of future sustainability, it is difficult to emphasis on local stakeholders as compared to the overseas workforces and communities. However, there are several authors who simply illustrate that for a multinational company, it is important to be socially responsible for all communities where it operates (Goulding, 2002).

According to the viewpoints of Mike W. Peng1 and Erin G. Pleggenkuhle-Miles, two primary stakeholders of a firm are employees and communities. In order to expand overseas to emerging economies, companies tend to avoid the domestic employees and communities. In the regard, growing to the international grounds not only assist in enhancing the profitability and return of the stakeholders but also leads to generate employment opportunities to the host countries (Grant, Shani and Krishnan, 1994). But this can be achieved at the expense of domestic stakeholders for the future expansion and growth.

However, when companies have adequate amount of resources, they tend to carry out their corporate social responsibilities for both domestic and overseas communities. But with the increasing competition, pressure of cutting the costs and reformation of managers have to prioritize their focus which at times lead to disturbing results for domestic stakeholders. Unexpectedly, due to rise in CSR because of globalization, migration of jobs from developed economies is increasing at a rapid pace (Hofstede, 1993). Contradicting to this, CSR is important aspect of the business enterprise irrespective to its level of operations because it helps in benefiting company itself while benefiting the society it operates in. However, it is one of the major footholds for the companies to expand their business operations to the international boundaries and attain desired growth and sustainability. In the public affairs forum in Atlanta 2006, argument on emerging tension as a flawless blizzard, a major risk of globalization to the American employees which mainly focuses on the responsibilities of multinational enterprises towards its inland forces and societies. However, with lack of positive outcomes, this constitutionally short-tempered debate will be heating up in years to come. However, there multinational organizations that are involving themselves to overseas CSR but not interested in reformulating tactics to work with NGOs in their base of pyramid (Locke, 2001).


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